Finance bill 2026 faces backlash over perceived bias against low-income earners
National
By
Esther Dianah
| May 27, 2026
The Finance Bill 2026 has come under criticism for allegedly favouring wealthy individuals while continuing to place a heavier tax burden on low-income earners.
The Kenya Human Rights Commission (KHRC) has faulted the proposals, arguing that the bill appears to encourage tax avoidance mechanisms that largely benefit the wealthy.
According to the Institute of Public Finance (IPF), Kenya currently has about 7,200 dollar millionaires and 16 centi-millionaires. The think tank has proposed the introduction of a wealth tax to ensure more equitable taxation.
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The proposed levy would target individuals with net assets exceeding Sh129 million, while centi-millionaires with assets above Sh12.915 billion would be taxed accordingly.
Kenya does not currently have a wealth tax. IPF argues that such a measure could generate up to Sh129.5 billion (about $1 billion) in revenue annually.
“We can tax those net assets that wealthy persons own and ensure that they are captured within the taxation framework in the country,” said Daniel Murakaru of IPF.
IPF and KHRC have urged lawmakers to reject several clauses in the Finance Bill 2026, terming them regressive and lacking relief for low-income Kenyans.
The think tank also raised concern over the exemption of Real Estate Investment Trusts (REITs) from Capital Gains Tax (CGT), warning that it could create loopholes for tax avoidance and shift the burden to other revenue streams such as VAT and PAYE.
It further recommended the rejection of a clause proposing VAT exemptions on all aircraft parts imported by operators or maintenance firms.
“We are suggesting that the exemption of aircraft parts from VAT to be reconsidered and to be revised. Secondly, we are also talking about the exemption of capital gains tax on real estate investment trusts to also be looked into,” Murakaru said.
KHRC’s Annete Nerima warned that exempting REITs from profit tax could create avenues for tax avoidance.
“They will transfer their property to the trust, and they get to sell it. Those investors will get their money without paying the interest that they are supposed to pay. If that happens, it means that Kenya will lose money,” she said.
Nerima further argued that weak political goodwill and gaps in the tax framework make it difficult to effectively tax the wealthy.
“We also rely on parliament who sometimes pass some these clauses that are very punitive to the ordinary Kenyans, to advance their own interests,” she said.
She added that some regressive tax provisions are passed due to limited understanding of the tax system among lawmakers, enabling wealth accumulation among the rich at the expense of ordinary citizens.
IPF maintained that while the proposals may appear to encourage investment, deeper analysis shows they could lead to significant revenue losses.
“We respectfully oppose the proposed blanket exemption of Capital Gains Tax on transfers of property to Real Estate Investment Trusts,” a joint submission by IPF and KEWOPA read.
The think tank warned that the exemptions could disproportionately benefit high-net-worth individuals who may restructure assets for tax planning purposes.
“The amendment may therefore undermine progressive taxation principles by reducing the ability of the tax system to effectively tax substantial gains arising from high-value property transactions,” it noted.
IPF urged the National Assembly Finance and Planning Committee to reject the CGT exemption proposals, arguing they weaken progressive taxation principles.
While the government seeks to broaden the tax base and improve revenue collection efficiency, analysts say a balance is needed to avoid overburdening already strained households.
President William Ruto’s administration plans to raise Sh4.82 trillion in the 2026/27 financial year to fund government expenditure.